Weibo Corp (WB) 2017 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to Weibo Reports Fourth Quarter Financial Results Conference Call.

(Operator Instructions)

Now, I would like to hand the conference over to your first speaker for the day, Ms. Wen Li.

Over to you, ma'am.

Thank you, Operator.

Welcome to Weibo's 2017 fourth quarter earnings conference call.

Joining me today are our Chairman of the Board, Charles Chao; our Chief Executive Officer, Gaofei Wang; and our VP, Finance, Fei Cao.

The conference call is also being broadcasted on Internet and is available through Weibo's IR website.

Before the management presentation, I'd like to read you the safe harbor statement in connection with today's conference call.

During the course of this conference call, we may make forward-looking statements, statements that are not historical facts, including statements about our beliefs and expectations.

Forward-looking statements involve inherent risks and uncertainties.

A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement.

Weibo assumes no obligation to update the forward-looking statements in this conference call and elsewhere.

Further information regarding this and other risks is included in Weibo's annual report on Form 20-F and other filings with the SEC.

All information provided in this press release is current as of the date hereof, and Weibo assumes no obligation to update such information, except as required under applicable law.

Additionally, I want to remind you that our discussion today includes certain Non-GAAP measures, which excludes stock-based compensation and certain other expenses.

We use Non-GAAP financial measures to gain a better understanding of Weibo's comparative operating performance and future prospects.

Our Non-GAAP financial excludes certain expenses, gains or losses and other items that are not expected to result in future cash payments or that are nonrecurring in nature and will not be indicative of our core operating results and outlook.

Please refer to our press release for more information about our Non-GAAP measures.

Following management's prepared remarks, we will open the lines for a brief Q&A session.

With this, I would like to turn the call over to our Chief Executive Officer, Gaofei Wang.

(foreign language)

Thank you.

Hello, everyone, and welcome to Weibo's fourth quarter and full year 2017 earnings call.

(foreign language)

On today's call, I will share with you key updates in Weibo's user growth, product development and monetization, review of the progress that we have made in 2017 and then share with you our strategic plan for 2018.

(foreign language)

Let me first discuss fourth quarter financial results.

We continued to see strong revenue and the user growth in the fourth quarter of 2017.

Our total revenue reached $377.4 million, up 77% year-over-year.

Advertising and marketing revenue reached $332.3 million, up 77% year-over-year, with a 79% of our ad revenue coming from mobile.

Non-GAAP net income was $146 million, up 90% year-over-year.

(foreign language)

Weibo's total revenue for fiscal year 2017 reached $1.15 billion, up 75% year-over-year, which is our fastest growth since IPO.

Advertising and marketing revenue reached $996.7 million, up 75% year-over-year.

Non-GAAP net income reached $405.7 million, up 121% year-over-year.

(foreign language)

Weibo's robust revenue growth and operating efficiency in 2017 are derived from the following 3 areas:

First, continuous user growth and the diversifying social product features have made Weibo the primary channel for advertisers to execute their social marketing campaigns.

Second, as a result of our efforts to further improve user engagements on Weibo, and enhance our content distribution system, we offer a full spectrum of advertising and marketing products and solutions, tailored to different customer segments from individuals to SMEs to key accounts.

This increase is customers' recognition towards Weibo's social marketing ability and overall value proposition.

Lastly, Weibo's social network effect has been further optimized in 2017, effectively enhancing our operating efficiency and monetization.

(foreign language)

On the user front, Weibo's monthly active users reached 392 million in December, up 25% year-over-year.

Average daily active users in December reached 172 million, up 24% year-over-year.

In December, 93% of Weibo's MAUs were mobile.

In 2017, our MAUs increased nearly 79 million and the DAUs increased 33 million, representing a larger user base increase than in 2016.

(foreign language)

Throughout 2017, Weibo's position as the leading social media platform in China has been further solidified and the competitiveness of Weibo's ecosystem continues to improve, even under the increasingly competitive China's mobile Internet market.

Weibo provides a platform for millions of users to discover information, share and express their views and engage in conversations on topics of their interest.

At the same time, Weibo presents a medium for a large number of content creators to display their talents to the world and utilize the platform to monetize the contents being created and ultimately capitalize their personal value through the fans they have accumulated.

(foreign language)

In discussing our operational update for the fourth quarter, I will cover Weibo's progress in the following areas.

(foreign language)

As a reminder, the ecosystem of Weibo's platform is developed around 3 core components: users, content and customers.

Our rapidly growing user base enables content creators to continuously build social assets and leverage our continuously improving products to pursue their monetization aspirations.

This promotes the creation of higher quality content that is then shared and distributed on Weibo, attracting more users, sparking conversations and distribution, and thereby increasing our user base and user engagement.

These social and interest networks formed by the users then act as a distribution channels, which, through our services and products, to help us establish more effective connection between our users and customers, increasing Weibo's marketing effectiveness.

As these 3 components come into play and reinforce one another, Weibo continuously increases in size and value, thus further strengthening our competitive position in the social media industry.

My operational update will elaborate in these 3 areas.

(foreign language)

On the user growth front, we see that the growth of our mobile Internet users have begun to slow down in 2017 as we are facing an increasingly competitive landscape.

However, as our network effect further expands and the social platform feature continues to strengthen, we were able to leverage and strengthen Weibo's competitive advantage in user acquisition to support further user growth.

On the channel investments; our strategic cooperation with the smartphone manufacturers and top APPs continue to deepen, benefiting from our growing marketing, the products integration as well as resources exchanges.

As a result, we have maintained relatively lower user acquisition costs than those of our peers, even under the current competitive market condition.

(foreign language)

Throughout 2017, we increased our strategic efforts and investments in user product development to improve user engagement.

As we gather more data from user interests and social behaviors, our strategy to invest in machine learning has begun to scale and we continue to see the benefits from this investment.

In December 2017, among Weibo's MAUs, the number of recall users increased over 50% year-over-year.

(foreign language)

On the product level, the competitive landscape towards interest-based information feeds and UGC short videos has increased in mobile Internet industry in 2017.

Both have been the key drivers for user growth and will also be our main focus around products developments in 2018.

We completed structural change on Weibo's core information feeds products in 2017 to include both social relationship-based information feeds and interest-based information feeds on the home timeline of Weibo's app.

Relationship-based information feeds now prioritize content based on the social interactions and the timeliness of content distributions, whereas interest-based information feeds are generated through user interests and content consumption.

This change is important to us and has further enhanced Weibo's unique competitive advantages in social media industry.

(foreign language)

In 2017, we saw Weibo's interest-based information feeds rapidly gain popularity among users to consume content.

In December, both the number of users who refreshed interest-based information feeds and the interest-based information feeds that were refreshed nearly doubled from last year.

This has helped us rapidly enter the news media market and we have noted a rise in the retention and engagement of users who used to be less active.

Moreover, increasing the exposure of contents on news media and top content creators in interest-based information feeds enables more exposure of UGC in relationship-based information feeds.

This will promote more UGC on Weibo, construct more user social relations and strengthen our social attributes.

(foreign language)

Moreover, we have increased our investment in UGC short video products in 2017.

The scale of UGC short videos has increased through products such as Weibo Stories.

In December, the number of users who post Weibo Stories daily increased sequentially by more than 50% and Weibo Story MAUs has maintained rapid growth.

In 2018, we will increase our investment in UGC short video products.

Besides optimizing Weibo Story content creation experience, we will focus on enhancing the user consumption experience of UGC short videos within our information feeds, allowing Weibo to be more competitive in the market and better promoting user growth in lower tier cities.

(foreign language)

In 2018, we plan to increase our investments through the following strategies.

First, we will deepen our partnership with the smartphone manufacturers, TV program and top APPs.

In addition to pre-installing the Weibo APP on all smartphones, we plan to expand the collaboration in contents to increase the efficiency in user acquisition.

Second, we will increase our investments in machine learning to improve the precision in matching user interest to recommended accounts and content, and optimize content consumption experience for users with varying levels of engagements so as to further increase user engagement.

Third, we will continue to increase our investments in products to strengthen our social attributes.

That said, we will further enhance social content production and maintain the users' social relations as our top priority for content distribution, to amplify the social features of the platform and differentiate ourselves from the market.

In 2018, given the current competitive landscape, we believe the investments will expand the scale of our platform, enhance our social network effect and benefit Weibo's growth over the long-term.

(foreign language)

Turning to content, short video remains as the top priority for us this year.

We foresee video to become the primary media format for our users to record, share and communicate with one another.

In 2017, short videos continued to grow rapidly, reaching more users than ever before.

The number of videos shared and video views also grew meaningfully.

In December, short video posts and short video views doubled from last year.

(foreign language)

One of our key focuses in 2017 was promoting the growth of short videos to strengthen our partnership with top self-media accounts and the major media/IP content organizations, working cohesively to improve Weibo's short video content ecosystem.

In addition to encouraging top self-media accounts to produce more video content, we are supporting them through better traffic distribution and accumulating social assets.

In December, daily short video posts from top self-media accounts grew by more than 50% year-over-year.

(foreign language)

Second, Weibo's partnership with multiple large media and IP content organizations have generated impressive results.

For example, Weibo has become the main online platform for traditional media in China to distribute their content, partnering with the media such as the CCTV and People's Daily to promote 19th CPC National Congress.

During the 19th CPC National Congress, short videos posted by state media were 35% of the total content posted, and related short video views reached around 3 billion views.

In the entertainment vertical, in 2017, we partnered with the 7 top TV channels, 3 online video websites based on IP content of TV series and variety shows, successfully promoting various TV series and variety shows including "The Rap of China" and drama series such as "Day and Night".

In December, short videos related to TV series and variety shows grew by more than two fold, allowing Weibo, TV channels and online video websites to effectively partner and collaboratively deliver content, further reinforcing Weibo's leadership in the entertainment vertical.

(foreign language)

As we noted in last year, one of our focuses has been to further verticalize content, building stronger engagements throughout every level.

By December, we have partnered with more or less than 1,300 MCNs, growing by nearly 300 MCNs from last quarter.

In December, the number of top content creators, daily posts by top content creators and monthly views all maintained a rapid growth from last year.

Moreover, the demonetization of the self-media continued to thrive on Weibo's platform in 2017.

Advertising, social commerce and paid subscriptions are the 3 main ways for top content creators to monetize on Weibo.

In 2017, their monetization scale nearly doubled year-over-year.

Supporting self-media accounts to accumulate social assets allow them to monetize, but more importantly, act as an incentive for them to continuously produce higher quality content to generate stronger engagement with fans.

This in turn raises user engagement on Weibo.

(foreign language)

For example, the e-commerce vertical has developed rapidly through 3 years of operation and the GMV generated from Weibo for fiscal year 2017 grew by over 70% year-over-year, while the fans and fans engagement also grew accordingly.

The improvement of our monetization ecosystem not only increases the engagement of top content creators, but also increases the fans base and engagements.

When this model is replicated in other vertical on Weibo, both the user scale and the user engagement in these verticals will further increase, enhancing Weibo's competitiveness as social media platform and monetization potential.

Moving forward, we will strive to enable more self-media accounts to monetize so thereby reinforcing Weibo's ecosystem.

(foreign language)

In 2018, we plan to optimize our content ecosystems through the following strategies.

First, we will continue to deepen our partnership with the content channels such as variety shows, TV, news media and competitive verticals.

In securing top IP and copyright content, we enhance Weibo's competitiveness in premium content consumption.

Second, we will continue to operate by verticals to expand the scale of top content creators and increase their engagement to sustain Weibo's core competitiveness in the content ecosystem.

Third, we will continue to increase the user base and improve the user experience of our content product matrix so as to enable users to efficiently express and display themselves.

Investing in contents will not only help us build a stronger content ecosystem and strengthen Weibo's competitive edge as the social media platform, but it will also help us expand the horizon of the content consumption market and broaden our product offerings.

(foreign language)

Lastly, turning to monetization, we achieved strong ad revenue growth in the fourth quarter.

In the fourth quarter, key accounts ad revenue and the number of KA customers have continued to grow rapidly.

Key accounts customers grew by 34% year-over-year, while key accounts revenue grew by 106% year-over-year.

This year, the scale of key accounts customers and ARPU have both grown meaningfully, driven by Weibo's viral platform effect and the strong influence of hot news and KOL.

As a result, Weibo has become the primary channel for new advertisers to test social marketing campaigns, while for recurring customers, Weibo becomes the long-term marketing partner to further explore the cooperation in social marketing.

For example, Samsung initiated a campaign targeting young Chinese users to market their C8 in the fourth quarter.

According to Admaster, by leveraging 3 young celebrities, combined with the Weibo's influence and viral nature of the short videos, Samsung's brand satisfaction rose by 100%, purchase intent rose by 138% and recommendation intent rose by 117%.

Our brand advertisers have also become more diverse.

In addition to strong FMCG advertising growth, we saw noticeable growth in auto, mobile, gaming advertising segments, further fueling the key accounts revenue increase.

(foreign language)

Turning to SMEs, in the fourth quarter, SME revenue increased 64% from the prior year, where customers grew 31% year-over-year.

The growth was mainly driven by the continuous enhancements we have made on our advertising platform.

For example, we implemented negative feedback strategy, providing users with the ability to comment on advertisements, ultimately leading advertisers to improve their ad quality.

Moreover, we implemented a dynamic ad load strategy to optimize the user consumption experience.

Based on the specific user's engagement level and a specific ad's interest, we adjusted the specific ad exposure to the user.

By applying the new strategy, we saw negative ad feedback experienced a double-digit decrease, and moving forward, we will implement this strategy to cover our core feeds.

Our goal is to better manage our ad products to improve ad efficiency.

In the fourth quarter, eCPM and engagement rates have continued to rise from the last quarter.

(foreign language)

As I have mentioned before, self-media grew rapidly in 2017 and we will continue to support this growth in 2018.

As KOL advertising has become an important part of social marketing, we will embrace more in self-medias in our monetization ecosystem, focusing on innovating ad products on the content and video they distribute.

We believe the mutual beneficial relationship between self-media advertising and our existing advertising, both help advertisers to reach more of the right users, enables the coverage of marketing a wider spectrum and supports Weibo's monetization ecosystem.

(foreign language)

In 2018, we plan to increase the competitiveness of Weibo's ad products through the following strategies.

First, we will increase our investments in user products to drive more user engagements on Weibo and enhance our social, viral network effect.

Second, we will further increase our customer base through educating them about successful case studies of Weibo's social marketing.

At the same time, we will continue to innovate and optimize our well-rounded set of social marketing products, focusing on rising virality, fans accumulation and ad conversion.

Both will help to raise Weibo's value and competitiveness, and further scaling customer growth.

Third, we will continue to enhance our ad algorithms.

After Super FST was released, we have noticed there is still a lot of data to mine and machine learning improvements we can make to enhance advertising efficiency.

At the same time, we will step up our cooperation with third-parties to continue to improve social interest graphs of our users and optimize our ad measurement system, further increasing advertisers' recognition to the value of Weibo's social marketing.

Fourth, we will further combine high quality content creators such as celebrities, content producing organizations, self-media and the media-alike to launch a well-established monetization ecosystem that delivers better content, drive innovative new advertising formats, raise monetization value of the content and expand Weibo's quality ad inventory.

(foreign language)

Overall, heading into 2018, we expect to face an increasingly competitive landscape in the mobile and internet industry, more notably certain irrational competitors.

Therefore, we will significantly increase our investment into market channels, content ecosystem improvement and expanding our product offerings.

Although this may come as a short-term impact towards our margin expansion, however we are certain that the investment we commit will be critical for expanding Weibo's platform and the market share.

At the same time, this will help us more effectively compete in the short video market, enhance our network effect and ensure Weibo's competitive edge to grow in the long-term.

(foreign language)

With that, let me turn the call over to Cao Fei for financial update.

Thank you, Gaofei.

Let me go through our financial highlights.

For fourth quarter of 2017, Weibo's total revenue reached $377.4 million, up 77% year-over-year, exceeding the previous guidance.

Non-GAAP net income attributable to Weibo was $146 million, up 90% year-over-year.

Non-GAAP diluted EPS was $0.64, compared to $0.34 a year ago.

With revenue peaking in our high season in Q4, we delivered adjusted EBITDA of $161.9 million, up 107% year-over-year, and adjusted EBITDA margin of 43% compared to 37% last year.

We're also pleased to announce that we have achieved an important milestone as our total revenue for full year 2017 surpassed $1 billion, to $1.15 billion, up 75% compared to 2016.

Our KA and SME businesses, which together represented 92% of Weibo's advertising revenues, each grew robustly in 2017 at 85% and 73% year-over-year, respectively.

Non-GAAP net income attributable to Weibo was $405.7 million for 2017, up 121% compared to 2016.

Non-GAAP diluted EPS was $1.80, compared to $0.82 in 2016.

Adjusted EBITDA was $471.3 million, up 143% year-over-year, and adjusted EBITDA margin was 41%, compared to 30% in 2016.

As a result of our continued efforts to drive revenue growth and operating efficiency, we continued to expand our margins throughout 2017.

We delivered Non-GAAP net margin of 35% for the year, compared to 28% in 2016.

Factoring a high income tax rate we had to bear in 2017, the 7 percentage point increase in net margin, once again, demonstrates the strong operating leverage of Weibo as a unique and a substantial social media platform.

In 2018, we will continue to drive operational and financial improvements across our business and we are confident that we are positioned for long-term growth as our users, content creators and customers continue to scale up.

Now, let me give you more color on fourth quarter revenues.

Advertising and marketing revenue for the fourth quarter reached $332.3 million, up 77% year-over-year.

Mobile ad revenue in Q4 was $262.9 million, up 105% year-over-year, representing 79% of our total ad revenue.

Weibo continues to capitalize on rapid growth of mobile advertising market in China, with 93% of mobile MAUs.

We are leveraging our robust ecosystem of users, content providers and advertisers to deliver a strong value proposition to each participant.

This powerful network effect, combined with the continued growth of Weibo's user base and user engagements has solidified Weibo as an essential element of mobile marketing in China and further strengthens Weibo's leading position in the social media industry at large.

Total advertisers in Q4 remained stable compared to Q3 and up 31% year-over-year.

It is worth noting, as Q4 is the peak season for major e-commerce sales in China, our SME advertisers have remained relatively stable and continued to effectively compete for inventory with e-commerce big brand advertisers.

Moving on to SMEs.

In Q4, Weibo's SME ad business delivered revenue of $166.6 million, up 64% year-over-year, continuing the strong momentum throughout 2017.

Revenues from both channel and self-service had strong growth year-over-year.

Key industry sectors contributing to strong revenue growth, including APP download, e-commerce and O2O.

Weibo has been able to attract more long tail SME customers to our platform.

As Gaofei mentioned, since the release of Super FST in late August of 2017, we have further optimized the advertising system to include negative feedback strategy and dynamic ad loads, helping make our ads more relevant and effective.

The optimization also helps encourage SMEs to increase the quality of their ads and help advertisers show their ads to people who are likely to spend more with them.

This is an important improvement to us.

We want to make sure that every dollar from our advertisers' budget is well spent.

Moving on to KAs -- our key account business, made up of mostly large brand advertisers, is another pillar of Weibo's growth engine.

In Q4, our KA ad revenue reached $127.4 million, up 106% year-over-year.

The number of KA customers reached another historical high, growing 34% year-over-year this quarter.

Social ads are continuing to grow and have become a "must have" to many of our advertisers.

As more KA customers see the impressive results from their Weibo social marketing campaigns, more brand advertisers have recognized the increasing marketing value gained through Weibo's unique content, innovative social nature and ability to attract strong user engagement.

This year, we have made continues efforts in diversifying our ad offerings and in promoting celebrities and the influencer, whose present on Weibo have also amplified the impact of social ads.

Weibo has also become a top promotion channel for Double 11 and 12, helping to increase brand affection and purchase for promoted products.

Revenue attributable to Alibaba was $38.4 million, up 55% year-over-year.

As pointed out on our third quarter conference call, we are a key platform for Alibaba in the fields of e-commerce, marketing, fan accumulation and fan interaction.

Alibaba continues to be a key strategic partner given its ad spending as well as the revenue derived from other areas of Alibaba's business, including social e-commerce, O2O, payment solutions, entertainment and videos.

This continues to be a strong partnership and we are confident in its continued success in driving value for both Weibo and Alibaba.

Value-added service(VAS) revenues was $45.1 million in Q4, up 81% year-over-year.

Membership fees, which include individual membership and enterprise account verification, was up 117% year-over-year, and data licensing was up 37% year-over-year.

The two together make up more than 50% of Weibo's VAS revenues.

Turning to cost and expenses, total Non-GAAP costs and expenses were $220 million, up 58% year-over-year, primarily due to increased marketing and development spend as well as higher turnover tax, which is in line with our rapid revenue growth.

In Q4, we continued to focus our efforts to drive user acquisition and retention.

As such, sales and marketing expenses grew at a faster rate compared to Q4 2016, specifically attributable to increased channel marketing spending and brand promotion of Weibo Stories.

Moving forward, as we think about user acquisitions and the retention over the longer term and the competitive landscape, we plan to be more aggressive on user acquisition and retention in multiple channels in 2018.

We believe this strategic reinvestment will enable us to solidify our market leadership as the top social media platform in China.

This quarter, we also stepped up our spending on R&D, machine learning and user video experience optimization.

As a technology driven company, Weibo will continue to focus on developing innovative user and ad products as well as facilitating a better user experience.

Non-GAAP operating income was $157.5 million in Q4, up 114% year-over-year.

Non-GAAP operating margin in Q4 was 42%, compared to 35% last year.

Our Non-GAAP operating margin for the full year of 2017 was 40%, compared to 27% last year.

As Gaofei mentioned, our current relatively high profit margins provide Weibo ample flexibility to further invest in user scale and build higher threshold for content ecosystems.

We expect our Non-GAAP operating margin for the full year of 2018 to maintain similar levels or to be slightly better compared to 2017.

Income tax expense was $17 million, compared to $55,000 last year, primarily due to tax exemptions expiring in 2017.

Non-GAAP net income attributable to Weibo in Q4 was $146 million, up 90% year-over-year.

Turning to our balance sheet and cash flow items.

As of December 31, 2017, Weibo's cash, cash equivalents and short-term investments totaled $1.79 billion compared to $396 million as of December 31, 2016.

Aside from earnings, the increase in cash, cash equivalents and short-term investments was also attributed to the net proceeds received from issuance of $900 million convertible senior notes.

For the fourth quarter, cash provided by operating activities were $198.3 million, capital expenditures totaled $9 million and depreciation and amortization expenses amounted to $4.5 million.

We delivered free cash flow of $189.3 million for the quarter, representing 149% growth year-over-year, surpassing the growth rate in net income.

This further demonstrates the strong operational leverage and unique platform business features Weibo has enjoyed.

According to our ADR depositary firm, as of December 31, 2017, approximately 28% of Weibo's shares outstanding were represented by American Depository Shares, 85% of which was considered floating shares.

Turning to Weibo's first quarter 2018 guidance.

We have adopted the new revenue standard ASC 606, "Revenue from Contracts with Customers", which took effect on January 1, 2018, by applying the modified retrospective method.

Under the new accounting standard, we are required to report our revenue net of value-added tax and to recognize revenue generated through advertising barter transactions.

Based on our preliminary assessment of the new accounting standard, the aggregate impact from the accounting changes will not be material to our financial statements as a whole.

By applying the new accounting standard, we estimate our first quarter revenue to be between $335 million and $345 million, which assumes a foreign exchange rate of RMB 6.50 to $1.

With that, let me now turn the call over to the operator to begin the Q&A portion.

(Operator Instructions) The first question comes from the line of Juan Lin from 86Research.

I have 2 questions.

The first one is on our user matrixes.

I noticed that, in 2017 we added 33 million DAU and 75 million MAU.

I am wondering whether the net growth of user number in 2018 and going forward will be stabilizing at the current level.

This is the first question.

And the second question is on our user feed monetization.

Now, that Super FST has already been available for both pay and SME advertisers, I am wondering what is the current eCPM of new feed versus last quarter and the Q4 2016, and what is the outlook for eCPM for 2018.

Thank you!

(foreign language)

I think, as everybody knows, the competitive landscape in China Mobile Internet industry has significantly changed in the last year, and the rising cost for user acquisitions through the handset manufacturers has been well noticed in the marketplace.

However, because Weibo had a long-term relationship with the handset manufacturers, top APPs, TV station and other long form video companies, we have a very unique position in the marketplace to negotiate right cost to work with in the user acquisition front.

(foreign language)

You look at the base number of our users -- we understand it's getting harder from a percentage point of view to grow the new users, and this is also reflected on both the fresh new users and the recall new users.

However, our monetization capability has been rising in the last couple of years as well, so we are confident that the monetization we can get from each user can well cover the costs incurred in the new user acquisitions.

(foreign language)

As I indicated in my prepared remarks, we already made a really good progress in the recalled customer in 2017.

So heading into 2018, this is one of the area we will continue to focus our efforts.

(foreign language)

I think on one side because we are a social media platform, we are [certified] a natural advantage in terms of connecting and recalling customer back; and on the other side, our capability in machine learning enhancement as well as our expansion in the video experience also helps us to attract our user back to our platform.

(foreign language)

Yes, I think there is 2 sets of eCPM worth noting.

One is related to those we call a pure media property, for example, the launch page eCPM.

The other sets are the news feed, the feed eCPM.

(foreign language)

You look at the pure media eCPM, compared to other competitors in the marketplace, we have certain price advantage over that.

With the growing base of our users, we intend to increase our eCPM on that front in 2018.

(foreign language)

On the feed eCPM, as we introduced the Super Fans Top in the marketplace in late third quarter last year, we have better a matching with our inventory and our customer demand.

(foreign language)

And we anticipate the eCPM for the feed in 2018 will continue to rise in the foreseeable future.

The next question comes from the line of Alicia Yap.

I have a question related to the 1Q guidance.

So can you explain a little bit more about the new accounting standard?

Your 1Q guidance actually implies currently about 68% to 73% year-over-year growth.

What would be the like-to-like growth rate if we were using the previous standard?

And then related to the 1Q, can you also give us some colors of the ultimate growth drivers?

Will that mainly driven by the increased ad budget from the existing customer, or you actually expect growing more SME customer base, or is it more driven by technology improvement that allow the customer to actually be a bit more efficiently, and also, leading to the higher eCPM?

And then any benefit you expect to get from the Chinese New Year gala, as well as the Winter Olympics?

This is Wen Li.

On your first question, I think in Caofei's prepared remarks we made it very clear that the aggregated impact from the accounting changes on revenue line is not material, taking the financial statement as a whole.

If I want to expand this a little bit, there's 2 parts of the new accounting standard that will have impact on Weibo moving into 2018.

One is the value-added tax.

Historically, we are using growth method, recording whereby our revenue included the value-added tax.

With the new accounting standard, now we are required to report revenue only through a net form.

That means that part of the value-added tax will be taken directly out of the revenue.

So that's the one-fold.

The second part is the accounting for the advertising barter transactions.

Prior accounting required no barter transactions can be recognized if a fair value cannot be determined in the marketplace.

However, the latest new accounting standard has updated that, with a transaction sort of a model, where a company is required to recognize a barter transaction based on transaction sort of arrangements.

With that, we anticipate that we have to report that barter in 2018.

But the net-net of these 2 components, they are offsetting each other, because one is to reduce your revenue, the other is increasing your revenue.

That's why we said that the aggregated impact from such changes will not be material.

So if you're using the old method and the new method, you are coming to a very similar results for 2 sets of accounting standards.

Hopefully, that answers your first question.

The second is on the driver part.

I think you already mentioned a number of those drivers as you asked the question.

I don't think there is one single set of driver that will be predominant compared to the others.

So it's a mix issue.

On the key account side, we're probably talking more on the ad budget shifting; while on the SME customer side, we're talking about a larger customer base, and we're talking about higher bidding activities on the platform.

So that we're anticipating the rising of the eCPM as more bidding available to us.

So I don't think we're single out a particular component that would be the only set to drive the revenue growth.

We're talking about multiple elements.

Your third question is on the Chinese New Year Gala and the Winter Olympic.

You want to go ahead?

(foreign language)

If you look back at the past 3 years of our Q1 performance, you might be noticing that Q1 is representing a very important quarter for us to acquire new users.

This is a quarter we generally work with CCTV-1 for the Chinese New Year Gala, through the red envelope and the participation in the Chinese New Year Gala, and we expect to attract a significant portion of our new user during the year.

(foreign language)

As you may know, Weibo was the only social media partner to the CCTV-1 for the last couple of years.

And even the Gala is going to happen in 3 days.

Even there's a lot of pre-event that's going on right now, and we already see pretty good pick-up in the new users.

We are hoping this year will be another good quarter for us to attract and to retain our users.

The Chinese New Year Gala, the collaboration between Weibo and CCTV, hopefully, will become another successful event for both parties.

Now, I would like to hand the conference back to the speakers.

Please go ahead, ma'am.

That concludes today's conference call.

Thank you for joining us, everyone.

Thank you.

Thank you.

That concludes the conference call for today.

Thank you all for your participation.

You may all disconnect the lines now.

Thank you.

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